Meeting of Finance Ministers and Central bank Governors, Washington DC, 14-15 April 2011 : final communiqué,
dal sito internet http://www.g20-g8.com/

1. We, the G20 Finance Ministers and Central Bank Governors, met today to address the economic challenges at hand and to progress on our previous commitments. We reaffirmed that our overriding objective is to improve the living standards of all our citizens through strong economic and jobs growth. We expressed our solidarity with the Japanese people after the tragic events, our readiness to provide any needed cooperation, and our confidence in the resilience of the Japanese economy and financial sector.

2. The global recovery is broadening and becoming more self-sustained, with increasingly robust private demand growth. But downside risks still remain. We agreed to remain vigilant and to take the actions required to strengthen the recovery and reduce risks.

Events in some Middle-East-North African countries and in Japan have increased economic uncertainty and tensions in energy prices. We noted there is adequate spare capacity to meet global energy demand.

3. In order to enhance our mutual assessment process to promote external sustainability, we agreed on a set of indicative guidelines (see attached) that complete the first step of our work to address persistently large imbalances. We now launch the second step of this process with an in-depth assessment of the nature of these imbalances and the root causes of impediments to adjustment. Based on this analysis, the IMF assessment on progress toward external sustainability, as well as the other aspects of our mutual assessment process, we will ascertain for our next meeting the corrective and preventive measures that will form the 2011 action plan to ensure Strong, Sustainable and Balanced Growth, to be discussed by Leaders at the Cannes Summit.

4. To strengthen the international monetary system, we agreed to focus our work, in the short term, on assessing developments in global liquidity, a country specific analysis regarding drivers of reserve accumulation, a strengthened coordination to avoid disorderly movements and persistent exchange rates misalignments, a criteria-based path to broaden the composition of the SDR, an improved toolkit to strengthen the global financial safety nets, enhanced cooperation between the IMF and regional financial arrangements, the development of local capital markets and domestic currency borrowing, coherent conclusions for the management of capital flows drawing on country experiences. We also agreed on the need to strengthen further the effectiveness and coherence of bilateral and multilateral IMF surveillance, particularly on financial sector coverage, fiscal, monetary and exchange rate policies.

5. We welcome the entry into force and the activation of the expanded and more flexible New Arrangements to Borrow (NAB). We will work to complete the steps required to implement the 2010 quota and governance reform by the Annual Meetings of 2012.

6. Commodity prices face increasing pressures. We welcomed the recommendations of the IEF, IEA and OPEC and committed to improve the timeliness, completeness and reliability of the JODI Oil database. We welcomed the work of international organizations on their report to address excessive price volatility in food and agricultural markets, and its impact on food security. We look forward to receiving their final recommendations, including on risk management and mitigation tools. We stressed the need for participants on commodity derivatives markets to be subject to appropriate regulation and supervision, called for enhanced transparency in both cash and derivatives markets as previously recommended by IOSCO, and asked IOSCO to finalize, by September, its recommendations on regulation and supervision in this area especially to address market abuses and manipulation, such as through formalized position management powers including the authority to set ex-ante position limits where appropriate, among other powers of interventions.

7. We welcomed the preliminary proposals of the FSB to strengthen its capacity, resources and governance including representativeness and asked the FSB to put forward formal proposals at its July meeting for review at our next meeting. We took stock of progress made to determine a cohort of global SIFIs and confirmed that the FSB will make recommendations on a multi-pronged framework with more intensive supervisory oversight, effective resolution capacities and higher loss absorbency capacity. We look forward to public consultations on SIFI recommendations and request a macroeconomic impact study by FSB and BCBS, in cooperation with BIS and IMF, to be reviewed at our next meeting. We welcomed the FSB work on the scope of shadow banking and look forward to the recommendations that the FSB will prepare for our next meeting on the regulation and oversight of the shadow banking system. We committed to set high, internationally consistent, coordinated and non-discriminatory requirements in our legislations and regulations implementing FSB recommendations on OTC derivatives markets and stressed the need to avoid overlapping regulations. We urge all jurisdictions to fully implement the FSB principles and standards on compensation. We call on the FSB to undertake ongoing monitoring in this area and will assess the results of the 2nd peer review on compensation practices by our next meeting. We will review at our next meeting progress made by the IASB and FASB towards completing their convergence project by the end of 2011 and look forward to the outcome of the ongoing IASB governance review process. We welcomed ongoing work of OECD and FSB and other relevant international organizations to develop common principles on consumer protection in financial services.

8. We agreed to maintain momentum for action to tackle non-cooperative jurisdictions and to fully implement the G20 anti-corruption action plan. We asked the Global Forum to report to us on ways to improve the effectiveness of exchange of tax information. We tasked the World Bank, working with Regional Development Banks, and the IMF, in coordination with other relevant organizations, to conduct the analysis on mobilizing sources of climate change financing, including public and private bilateral and multilateral as well as innovative sources, drawing inter alia on the AGF report consistent with the objective, provisions and principles of the UN Framework Convention on Climate Change. We support the work of the transitional committee established for the design of the Green Climate Fund. We reemphasize the importance of implementing the Seoul Development Consensus on Shared Growth and its Multi-year Action-Plan. We look forward to concrete recommendations from the High level panel on infrastructure investment by September.

G20 Indicative Guidelines for Assessing Persistently Large Imbalances

1. Our aim is to promote external sustainability and ensure that G20 members pursue the full range of policies required to reduce excessive imbalances and maintain current account imbalances at sustainable levels.

2. In February we agreed on a set of indicators that will allow us to focus through an integrated 2-step process on those persistently large imbalances that require policy action. These indicators are (i) public debt and fiscal deficits; and private savings rate and private debt (ii) and the external imbalance composed of the trade balance and net investment income flows and transfers, whilst taking due consideration of exchange rate, fiscal, monetary and other policies.

3. To complete the first step, we have agreed today on indicative guidelines against which each of these indicators will be assessed. While not policy targets, these guidelines establish reference values for each available indicator allowing for identification of countries for the second step in-depth assessment. Four approaches will be used:

· 1 -- A structural approach, which is based on economic models and grounded in economic theory, which benchmarks G20 members against each indicator in a way that takes into account specific circumstances including large commodity producers (e.g. its demographic profile, oil balance or trend growth).

· 2 -- A statistical approach which benchmarks G20 countries on the basis of their national historical trends.

· 3 -- A statistical approach which benchmarks G20 country's historical indicators against groups of countries at similar stages in their development.

· 4 -- A statistical approach which draws on data, benchmarking G20 country's indicators against the full G20.

4. Statistical approaches are based on the 1990 to 2004 period , as this is the period that preceded the large build up in external imbalances. Reference values drawn from 1990-2010 were also provided as a complement. In all four approaches, forecast figures over the 2013-15 period are compared to the values suggested by the guidelines to determine whether or not an in depth assessment should be undertaken. Those countries identified by at least two of the four approaches as having persistently large imbalances will be assessed in-depth to determine in a second step the nature and root causes of their imbalances and to identify impediments to adjustment. In carrying out this assessment, we will take due account of the exchange rate and monetary policy frameworks of members. For members of the euro area with its governance framework, this assessment will involve the appropriate authorities. National circumstances will also be taken into account. In the second step assessment, the independent IMF analysis will rely on IMF forecast data, while countries' own assessments can use national data.

5. For the identification of countries that will move into the second stage, the selection rules for G20 countries accounting for more than 5 % of G20 GDP (on market exchange rates or PPP exchange rates) will reflect the greater potential for spillover effects from larger economies.

Il Sole 24 Ore

B. Eichengreen, Una inevitabile sforbiciata per l’Europa, in: Il Sole 24ore, 10 dicembre 2010

BERKELEY – Ciò che una volta poteva essere liquidata semplicemente come crisi greca, o come crisi greca e irlandese, ora è chiaramente diventata una crisi dell’Eurozona. Risolvere tale crisi è nel contempo più semplice e difficile di quanto si possa comunemente pensare.

La situazione economica è piuttosto chiara. La Grecia ha un problema di bilancio. L’Irlanda ha un problema di banche. Il Portogallo ha un problema di debito privato. La Spagna ha un cocktail di tutti e tre. Anche se le specifiche differiscono, le implicazioni sono le stesse: ora tutti devono sopravvivere a tagli di spesa atrocemente dolorosi.

Il modello standard volto ad attenuare gli effetti dell’austerità prevede di conciliare i tagli alla spesa domestica con la svalutazione della valuta. La svalutazione rende le esportazioni più competitive, e consente di sostituire la domanda interna compressa con la domanda esterna.

Tuttavia, non avendo una valuta nazionale da deprezzare, tutti questi paesi devono sostituire la svalutazione esterna con la svalutazione interna. Devono tagliare i salari, le pensioni e altre spese, al fine di ottenere lo stesso miglioramento di competitività necessario per rimpiazzare la domanda interna con quella esterna.

I paesi in difficoltà hanno, infatti, mostrato una certa fermezza nell’implementare dolorosi tagli. Resta però una variabile economica che non si coniuga con le altre: il debito pubblico e privato. Il valore dei debiti governativi ricevuti in eredità resta intatto, e, ad eccezione di un manipolo di obbligazioni nei confronti di creditori cosiddetti junior, anche i debiti bancari restano inalterati.

Questo semplice fatto crea una contraddizione fondamentale per la strategia di svalutazione interna: più i paesi riducono salari e costi, più pesanti saranno i debiti in eredità. E, a fronte di un maggiore peso del debito, devono essere attuati ulteriori tagli alla spesa pubblica e una maggiore pressione fiscale per provvedere al debito del governo e delle banche. In questo modo si rende necessaria una maggiore svalutazione interna, che aumenta ulteriormente il peso debitorio, e così via, in una viziosa spirale al ribasso che porta a una depressione

Se deve essere attuata una svalutazione interna, occorre ridurre il valore dei debiti, dove rappresentano già un peso notevole. Occorre ristrutturare il debito governativo e convertire i debiti delle banche in azioni e, laddove le banche siano insolventi, annullarli. Inoltre bisogna annullare i debiti derivanti dai mutui.

I policymakers sono comprensibilmente restii a intraprendere tale strada. I contratti sono sacrosanti. I governi temono di perdere credibilità con i mercati finanziari. Dove le obbligazioni sono detenute da stranieri, e in particolari da banche straniere, annullarli potrebbe solo destabilizzare altri paesi.

Queste sono obiezioni ragionevoli, ma non devono portare a conclusioni irragionevoli. Le alternative a disposizione sono la svalutazione esterna e interna. I leader europei devono scegliere o l’una o l’altra. Sono concordi nell’escludere la svalutazione esterna. La svalutazione interna richiede però una ristrutturazione del debito, e negarla è tanto irragionevole quanto illogico.

I meccanismi di ristrutturazione del debito sono semplici. I governi possono offrire una serie di nuovi bond pari al valore parziale delle loro esistenti obbligazioni. I detentori di bond possono scegliere tra obbligazioni par, con un valore pari ai bond esistenti ma con una scadenza maggiore e un tasso di interesse inferiore, e obbligazioni discount con una scadenza inferiore e un tasso di interesse più elevato, ma con un valore inferiore a quello dei bond esistenti.

Non è nulla di trascendentale. Tale strategia era già stata applicata in passato. Sono tre però i prerequisiti fondamentali per raggiungere il successo.

Il primo: i detentori di bond dovranno essere rassicurati sul fatto che i nuovi bond siano sicuri. Qualcuno deve garantire che tali bond siano adeguatamente coperti da garanzie collaterali. Quando negli anni 80 fu ristrutturato il debito sudamericano con il Piano Brady, tali sweeteners o addolcimenti furono forniti dal Tesoro statunitense. Questa volta devono intervenire il Fondo monetario internazionale e il governo tedesco.

Il secondo: i paesi devono muoversi all’unisono, altrimenti, la ristrutturazione di un paese intensificherà le probabilità che altri entreranno in crisi, dando vita a un contagio.

Infine, il terzo: le banche che assorbono le perdite come conseguenza di tali ristrutturazioni dovranno rinforzare i propri bilanci. Le banche hanno bisogno di veri stress test, non del gioco formale di fiducia condotto all’inizio di quest’anno. Qualora realistici scenari di ristrutturazione del debito indichino ammanchi di capitale, si renderà necessaria una conversione generale del debito bancario in azioni. E laddove questo non sia sufficiente, le banche avranno bisogno di immediate iniezioni di capitale da parte dei propri governi.

Di nuovo, questo tipo di strategia richiede un’azione all’unisono da parte dei paesi di Eurolandia. E, con un rafforzamento dei bilanci bancari, sarà possibile ristrutturare i debiti derivanti dai mutui, i debiti bancari e altri debiti del settore privato, senza destabilizzare i sistemi finanziari.

Ora arriva la parte difficile. Tutto questo lavoro richiede una leadership. I leader tedeschi devono riconoscere che le banche del proprio paese sono pericolosamente esposte ai debiti della periferia europea. Devono convincere i propri elettori che utilizzare denaro pubblico allo scopo di fornire sweeteners per la ristrutturazione dei debiti e di ricapitalizzare le banche è essenziale ai fini della strategia di svalutazione interna, a loro avviso, necessaria anche per i paesi vicini.

In sintesi, i leader d’Europa – soprattutto tedeschi – devono portare avanti l’idea che l’alternativa a tutto ciò sia veramente spaventosa per essere contemplata. Realmente spaventosa.

Barry Eichengreen è professore di economia e scienze politiche all’Università di Berkeley in California.

Copyright: Project Syndicate, 2010.www.project-syndicate.orgPodcast di questo articolo in inglese:Traduzione di Simona Polverino

J.I. Canales-Kriljenko, L.I. Jácome, A. Alichi e I.L. de Oliveira Lima,
Ending Instability,
Finance & Development, March 2011, Vol. 48, No. 1

How monetary policy reforms helped propel five major Latin American countries from recurrent crises to economic stability

A LITTLE over two decades ago, much of Latin America faced financial instability, currency crises, and even hyperinflation. These painful developments became recurrent and the social and economic impact was grave—production was disrupted and many people lost jobs and sometimes a lifetime’s worth of savings. Social frustration was high.

Today, though, things are different—especially in five of the biggest Latin American countries, which account for about 80 percent of the region’s gross domestic product. Brazil, Chile, Colombia, Mexico, and Peru—what we call the Latin American Five (LA5)—have set the pace for a region that has weathered the global financial crisis to become one of the strongest emerging markets. How did they manage to achieve this radical change that 20 years ago most would have thought unreachable?

Although many factors—including some luck—played a role, two crucial elements were central bank institutional reforms and changes to the monetary policy frameworks. These far-reaching reforms did not take place overnight and were effective mainly because for somewhat more than a decade the LA5 countries maintained responsible fiscal and financial policies that kept vulnerabilities to adverse developments in check. Together, those policies reinforced the ability of central banks to preserve price stability and build credibility—which in turn enhanced their capacity to guide the inflation expectations of citizens and businesses. This strengthening of the central bank role arose not only from a clear mandate to fight inflation, but also from the central banks’ increased autonomy and accountability, from better policies, and from enhanced communication and transparency. The improved policies helped insulate these economies from the worst effects of the global financial and economic crisis (see “Sustaining Latin America’s Transformation” in this issue of F&D).

Increased autonomy and accountability

In most cases, new laws gave LA5 central banks the primary mandate of preserving price stability. Central banks were granted broad autonomy to carry out their mandate and resist political and interest-group pressures. A milestone in the reform in most countries was the removal of the link between monetary policy decisions and the political cycle—by creating central bank board member terms that exceeded, or overlapped, the presidential term. Other key legal provisions included vesting central banks with the power to manage the policy interest rate and forbidding or limiting direct lending to the government. In exchange for giving central banks this autonomy, the legislation strengthened central bank accountability to the markets and society at large by requiring them to disclose and explain their policies, goals, and results through frequent communication.

Today, LA5 central banks are among the most autonomous central banks in Latin America and are slightly better than many other important emerging market central banks (see Chart 1). But that does not mean there isn’t room for further change. For example, Brazil could enshrine central bank autonomy in legislation—although in practice the central bank has enjoyed de facto autonomy during the past 16 years. Central banks in Colombia and Peru could further insulate the selection of their central bank board members from the political cycle, while Mexico and Chile could require governments to maintain adequate levels of central bank capital.

Better policies

With a clear mandate on price stability, the LA5 central banks adopted inflation targeting as the basis of their monetary policy—setting a rate of consumer price inflation as the primary goal. The new policy regime anchored inflation expectations and increased monetary policy flexibility, including on the exchange rate front. To deliver on their mandate more effectively, the LA5 central banks revamped their operational techniques. They all eventually chose a short-term interest rate (the “policy rate”) as their operational target to achieve the inflation goal. Central banks use the policy rate to signal changes in the stance of monetary policy, increasing the policy rate when inflation pressures build and decreasing it when they ease. LA5 central banks also expanded and refined their toolkits to conduct open market operations, which allowed them to keep demand and supply for domestic liquidity in equilibrium and market rates close to the policy rate. This required improving their capacity to forecast the main factors that affect domestic liquidity—such as demand for currency and government cash flows.

Enhanced transparency

These reforms and policy innovations benefited from enhanced communication and transparency. They proved to be critical to boosting the effectiveness and credibility of monetary policy. Over time, LA5 central banks got better at explaining their policy strategy and individual policy decisions. For about a decade now, LA5 central banks have been preparing and publicly disclosing inflation or monetary policy reports three or four times a year. They decide the level of the policy rate during preannounced meetings and disclose the rationale behind their rate changes and other policy decisions; some publish the minutes of their board meetings. LA5 central banks also constantly communicate with the market and issue press releases as needed. Those central banks also make available data on market views about key macroeconomic variables—in particular, about expectations on inflation and economic activity—as well as their own forecasts. This ample availability of data has helped build public trust, because market participants can verify, at a reasonably low cost, that the monetary policy authorities are acting consistently with their stated objectives.

Together with far-reaching monetary reforms, significant improvement took place in government tax and spending policies and in banking supervision and regulation. Taking advantage of a commodity price boom and easy global financial conditions during 2003–07, the LA5 countries were able to build fiscal and external buffers—reducing the risk from public debt burdens and boosting international reserves—to provide a cushion against outside economic shocks. At the same time, the countries improved regulation and supervision with the aim of avoiding large bailouts of insolvent institutions. These changes contributed to reduced economic and financial vulnerabilities in the LA5 countries and helped central banks conduct consistently credible and flexible monetary policy.

Testing under fire

Then two major events hit the world back to back. In 2007 food and oil prices skyrocketed, and in September 2008 the global financial crisis began in earnest, after the failure of the Wall Street investment firm Lehman Brothers.

Soaring commodity prices in combination with demand pressures in some countries pushed inflation above targets. With the aim of limiting spillovers into core inflation (from which energy and food prices are removed), central banks tightened monetary policy by raising interest rates, which peaked by mid-2008. As a result of capital inflows and favorable terms of trade, domestic currencies tended to appreciate, which helped moderate inflation pressure by keeping import costs down. Official foreign exchange intervention and reserve accumulation varied across the LA5 countries.

In contrast, the global financial crisis came with a sharp increase in risk aversion, which caused a sudden stop in domestic and foreign investment. Global trade also collapsed and a worldwide recession ensued, reducing inflation pressures. In the past, such sudden stops associated with global recession and debt shedding fueled domestic currency and banking crises in Latin America. This time, the new monetary policy approaches—together with stronger overall economic conditions and better fiscal policies—enabled the LA5 central banks to maintain stability while handling the associated large swings in real exchange rates.

Because of confidence in monetary policies, inflation expectations remained within target levels, which meant the LA5 countries could allow declines in the nominal exchange rate, to different degrees, to do much of the job of coping with the global crisis without worrying too much about the inflation effects. But they did not totally abandon exchange rates to the market. They maintained a trading presence so that markets did not get carried away, given the considerable uncertainty in global financial markets. The LA5 central banks sold in the foreign exchange market significant amounts of the international reserves they had built up, and reversed earlier measures to absorb foreign exchange liquidity (see box).

Tapping the war chests

When external financial conditions were favorable and export prices high, the LA5 central banks built up considerable international reserves.

When external conditions turned bad, the LA5 central banks used those reserves to smooth out depreciation of their currencies. Brazil and Mexico sold almost 10 percent of their international reserves, but they still experienced the largest currency depreciation—about 30 percent between August 2008 and February 2009. The central bank of Peru used close to 20 percent of its international reserves over a couple of months, letting its currency slide by only 11 percent.

In contrast, Chile and Colombia allowed their currencies to depreciate more than Peru’s and sold fewer international reserves. In addition, some LA5 central banks secured additional external support for their reserve positions for extra peace of mind given the uncertain magnitude of the global financial crisis. Colombia and Mexico got access to a new IMF facility, the Flexible Credit Line—reserved for countries with strong policies and institutional frameworks—which would allow them to borrow from the IMF if needed. Brazil and Mexico also had the ability to swap domestic currency with the U.S. Federal Reserve for up to $30 billion.

The LA5 central banks used other techniques as well to improve foreign exchange availability in their economies, for example through foreign exchange swaps (Brazil and Chile).

Despite sharp declines in exchange rates, which raised import prices, the public expected inflation to remain low. In particular, surveys showed that 12-month inflation expectations stayed within the target bands during most of the crisis period—even when actual inflation missed the target range (see Chart 2). This suggests that central banks’ credibility led markets to distinguish between cyclical short-term inflation and long-term trends.

Softening the recession’s blow

Confident about inflation commitments

By early 2009, when the global financial crisis had become a global recession, LA5 central banks started to cut policy rates to help economic recovery. The pace of monetary policy loosening varied, depending on inflation projections and each country’s position in the business cycle. Because policy rates were high before the Lehman failure, most LA5 central banks could cut them significantly—in contrast to advanced economies, where central banks had policy rates already close to zero. Like their counterparts in advanced economies, LA5 central banks adopted various measures to ease the shortage of cash in their economies, such as loosening access to central bank facilities for liquidity provision and cutting reserve requirements. On the other hand, considering the lagged effect of monetary policy, the high domestic interest rates before the (unexpected) global crisis could have exacerbated the recessions in these countries.

Communication was crucial. Central banks explained their policy decisions and goals to the markets. They stressed that prospects for low inflation and economic recession warranted an unusually aggressive cut in policy rates. They noted that expansionary monetary policies were needed to preserve normal liquidity conditions—an implicit reference to financial stability. Nevertheless, while explaining their decisions to ease monetary policy and ensure financial market functioning, LA5 central banks clearly delivered the message that, as soon as inflation pressures emerged, monetary policy tightening would start, which has happened in Brazil, Chile, and Peru.

Still, despite their recent success, there is no room for complacency. These countries are already facing another challenge. Having recovered smartly from the global downturn while advanced economies sputter, these economies are again among the darlings of foreign investors. How the LA5 deal with this new capital surge will be another test of how well they manage risks to financial and economic stability. ■

Jorge Iván Canales-Kriljenko is a Senior Economist in the IMF’s African Department, Luis I. Jácome is a Deputy Division Chief in the IMF’s Monetary and Capital Markets Department, Ali Alichi is an Economist in the IMF’s Asia and Pacific Department, and Ivan Luís de Oliveira Lima is a Technical Assistance Advisor in the IMF’s Monetary and Capital Markets Department.

This article is based on IMF Working Paper 10/292, “Weathering the Global Storm: The Benefits of Monetary Policy Reform in the LA5 Countries,” by Jorge Iván Canales-Kriljenko, Luis I. Jácome, Ali Alichi, and Ivan Luís de Oliveira Lima, published in December 2010.

P. Giuliano, P. Mishra e A. Spilimbergo, Free Governments, Good Policies,
Finance & Development, March 2011, Vol. 48, No. 1

Economic reforms may scare politicians, but democracy and economic liberalization generally go hand in hand

THE global financial crisis has underscored the need for countries to undertake structural reforms to increase income and make their economies more stable. By removing impediments to growth, properly implemented structural reforms—such as trade liberalization, privatization, and regulation of monopolies—increase potential output and in the long term benefit everybody.

Even so, structural reforms often affect powerful interests and can be difficult to implement. As Luxembourg Prime Minister Jean-Claude Juncker noted: “We all know what to do, but we don’t know how to get reelected once we have done it” (The Economist, 2007). Why is that the case? Are some institutional settings more conducive than others to reforms? Certainly one of the oldest, and still unanswered, questions in economics and political science is whether political freedom is an essential ingredient—or an impediment—to structural reforms. There are good theoretical arguments and numerous examples to support all positions on this question.

Those who believe less democratic regimes are good for economic liberalization can cite the important reforms undertaken in Chile under the virtual dictatorship of Augusto Pinochet in the 1970s and ’80s and in South Korea under the autocratic rule of Park Chung-hee in the 1960s and ’70s. Many contemporary industrialized countries were not democracies when they took off. In east Asia, for example, a great deal of development took place under undemocratic regimes.

Theoretically, there are also compelling reasons autocratic regimes may favor economic reforms and growth. A fully democratic regime can fall prey to interest groups that put their goals before society’s general well-being. Sometimes, capitalists entrenched in their rent-seeking positions are the main opponents of economic reforms. In a newly independent country, it may take a “benevolent dictator” to shelter institutions, prevent the government from falling captive to interest groups, and allow the state to function efficiently. In particular, interest groups can block reforms if there is uncertainty about the distribution of benefits (Fernandez and Rodrik, 1991). Democracy can also lead to excessive private and public consumption and insufficient investment (Huntington, 1968), whereas dictatorial regimes can increase the domestic saving rate through financial repression. Wages are typically higher under democracy (Rodrik, 1999). Several countries, including those of the former Soviet Union and many in east Asia, increased savings, and ultimately achieved high economic growth, thanks to a repressive political system and an attendant highly regulated financial system.

Do these historical examples and the theoretical arguments make a compelling case against democracy’s role in economic reform? No. Strong theoretical arguments and solid empirical evidence support the contention that democracy often accompanies economic reforms. These are some of the theoretical arguments:

•Dictators’ preferences can change over time. Because those preference changes cannot be constrained by law, dictators cannot credibly commit to reforms (McGuire and Olson, 1996).

•Autocratic rulers tend to be predatory, disrupting economic activity and making reform efforts meaningless.

•Autocratic regimes have an interest in postponing reforms and restricting rent-generating activities to their supporters. Democratic rulers, conversely, are generally more sensitive to the interests of the public and are more willing to implement reforms that break up monopolies in favor of the public interest.

•Secured property rights, as guaranteed by a democracy, are key to economic development.

First comes first

There is also much empirical evidence that reforms and democracy go hand in hand. The correlation between democracy and economic reforms is very strong both across time and countries. Chart 1 shows the correlation between indices of political freedom and indices of reform over time. The indices of political freedom are based on criteria established by the Polity IV database (Marshall and Jaggers, 2009)—with zero the most authoritarian and 1 the most democratic. Reforms are measured over time in six areas—domestic financial, capital account, product markets (electricity and telecommunications), agriculture, trade, and current account transactions (see box). Again, the index ranges from zero to 1, with zero corresponding to the least reformed and 1 to the most reformed. Reforms in all six areas show a strong correlation to democracy, with democracy usually preceding the deregulation process. Chart 2 shows this strong correlation for a cross section of countries.

Marching in tandem

Countries that are more democratic are also more reformed, but correlation does not indicate that democracy is necessarily the cause of economic reform. The relationship could be the other way around, or both democracy and economic reforms could be driven by a common third factor. The question of democracy’s effect on economic reform is largely unanswered.

The structural reform data set

Our analysis is based on a new and extensive data set, compiled by the IMF’s Research Department, that describes the degree of regulation in 150 industrial and developing countries (see Ostry, Prati, and Spilimbergo, 2009). Six reform indicators cover both the financial and real sectors. Financial sector indicators include reforms pertaining to domestic financial markets and the external capital account; real sector structural reform indicators include measures of product and agricultural markets, trade, and current account reforms. Each indicator contains subindices that summarize dimensions of the regulatory environment in each sector. The subindices are aggregated into indices and constructed so that all measures of reform fall between zero and 1, with higher values representing greater liberalization.

To determine whether democracy is the cause of reform, we used a novel data set that covers almost 150 countries and 6 sectors and spans more than 40 years (Giuliano, Mishra, and Spilimbergo, 2009). We found that improvement in democratic institutions (as measured by Polity IV) correlates significantly with the adoption of economic reforms. Moving from an autocratic regime to a complete democracy is associated with a 25 percent increase in the index of reform. We also found no feedback effect—that is, economic liberalization does not spark political liberalization. This finding will disappoint those who believe that economic engagement with autocracies will spark political change.

How do we square the finding that democracy is good for reform with Juncker’s observation that voters tend to punish politicians who implement reforms? It turns out that the evidence does not support Juncker’s worries. Buti, Turrini, and van den Noord (2008) report that politicians who implement reforms do not lose subsequent elections, especially in countries with a high level of financial development. The same is true for the political consequences of large budget deficit reductions. Alesina, Carloni, and Lecce (2010)—in a 1975–2008 sample of 19 Organization for Economic Cooperation and Development countries—find no evidence of governments systematically voted out of office after quick reductions of budget deficits.

The bottom line is that democracy is good for structural reforms, but the reverse is not true—economic liberalization introduced by autocracies does not cause a move to democracy. Moreover, there is no foundation for politicians’ fear that voters will punish policymakers who implement financial sector reforms or reduce fiscal deficits. ■

Paola Giuliano is an Assistant Professor in the Anderson School of Management at the University of California, Los Angeles. Prachi Mishra is an Economist in the IMF’s Research Department and Antonio Spilimbergo is an Adviser in the IMF’s European Department.

References

Alesina, Alberto, Dorian Carloni, and Giampaolo Lecce, 2010, “The Electoral Consequences of Large Fiscal Adjustments” (unpublished).

Buti, Marco, Alessandro Turrini, and Paul van den Noord, 2008, “Can Governments Implement Structural Reforms and Yet Be Re-elected?” VoxEU, June 17.

Giuliano, Paola, Prachi Mishra, and Antonio Spilimbergo, 2009, “Democracy and Reforms: Evidence from a New Dataset,” CEPR Working Paper 7194 (London: Centre for Economic Policy Research).

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B. Eichengree, La ricetta del piano Brady,
in: Il sole 24ore, 11 maggio 2011

BERKELEY – I mercati finanziari sono sempre più sicuri dell’imminenza di una ristrutturazione del debito greco con gran timore dei policymaker europei che temono il peggio. Nel caso peggiore, come ha affermato Juergen Stark membro della Banca Centrale Europea, un’eventuale ristrutturazione del debito di un paese membro dell’eurozona potrebbe addirittura superare le conseguenze della bancarotta della Lehman.

Ma c’è anche uno scenario migliore, ovvero quello in cui il processo di ristrutturazione del debito greco avviene in modo tale da non minacciare il sistema bancario.

Il modo più semplice per impiegare lo scenario migliore implicherebbe richiedere alle banche esposte al debito dei paesi del sud dell’Europa di aumentare il capitale. Il secondo round di stress test portato avanti dall’Autorità bancaria europea sembra mirare proprio a questo. Mostrando chi è forte e chi è debole, degli stress test portati avanti in modo efficace limiterebbero anche i rischi delle controparti. I prestatori disporrebbero di informazioni adeguate sulle aziende con cui fare business e su quelle da evitare.

Ma i precedenti europei non ispirano fiducia sul fatto che i prossimi stress test saranno più rigorosi degli ultimi. Aumentare il capitale implica costi importanti, il che porta gli attori interessati a negare i problemi piuttosto che a riconoscerli.

Un piano B prevedrebbe l’estensione della maturazione del debito della Grecia. Il governo greco potrebbe semplicemente annunciare lo scambio delle vecchie obbligazioni per bond nuovi che maturano, ad esempio, in 30 anni. Non ci sarebbe alcuna svalutazione del capitale o tagli ai rendimenti per i creditori, ma solo più tempo per i rimborsi. Dovendo riconoscere le perdite subite, le banche verrebbero risparmiate da eventuali danni.

Ma ciò lascerebbe comunque la Grecia con un enorme debito sulle spalle. E’ necessaria una riduzione del 40% del debito stesso, sia sotto forma di interessi diminuiti o di capitale ridotto, per riportare il rapporto debito-PIL al di sotto del 100%, un livello che dovrebbe permettere al paese di soddisfare gli obblighi di pagamento.

Esiste fortunatamente un altro modo, ovvero implementare il Piano Brady grazie al quale le banche commerciali insieme agli Stati Uniti, al Fondo Monetario Internazionale e al Club di Parigi dei creditori sovrani hanno potuto ristrutturare e ridurre il debito dei governi latino americani e dell’Europa dell’est alla fine degli anni ’80. Due dei miei vicini della California del nord, Peter Allen e Gary Evans, entrambi veterani del piano Brady, hanno spiegato le modalità di implementazione di un piano simile nel contesto attuale.

Innanzitutto, le nuove obbligazioni potrebbero essere strutturate in modo tale che la riduzione (o il taglio di capelli, come si dice nel gergo del settore) contratta dalle banche possa essere considerata come una perdita fiscale che comporti anche una limitazione del colpo di scure sui profitti. Ciò comporterebbe l’utilizzo delle risorse fiscali pubbliche per facilitare il processo di ristrutturazione del debito della Grecia. Ma se i soldi dei contribuenti sono comunque a rischio, come avviene nel contesto attuale, perché non usarli in modo creativo?

In secondo luogo, la BCE potrebbe offrirsi di assicurare un trattamento speciale (finanziamento garantito) per il nuovo debito al fine di renderlo più attrattivo agli occhi degli investitori.

In terzo luogo, il processo di regolamentazione potrebbe essere utilizzato per conciliare la necessità immediata di ristrutturazione della Grecia con la volontà delle banche di aspettare il rafforzamento dei bilanci. Il piano Brady prevedeva una regola di contabilità chiamata FASB 15 che permetteva di richiedere prestiti ristrutturati al valore nominale originale nel caso in cui la somma dei pagamenti degli interessi e del capitale relativi agli strumenti di ristrutturazione equivalesse a quella relativa al credito originale. Si potrebbe quindi dare alle nuove obbligazioni, sulle quali gli interessi siano già stati caricati, lo stesso valore contabile delle vecchie obbligazioni i cui interessi sono invece già stati ripagati.

Questo trattamento speciale di pagamento potrebbe poi essere suddiviso nel tempo in varie fasi, mettendo le banche nella posizione di riconoscere le perdite, ma solo nel momento in cui siano in grado di farlo.

Quarto, i nuovi strumenti potrebbero essere adattatati in modo tale che sia le banche che i prestatori ufficiali abbiano un ruolo concreto nella realizzazione del successo del paese. Tramite il piano Brady, gli obblighi di pagamento di un paese venivano indicizzati sulla base dei prezzi delle sue esportazioni o dei termini commerciali. Per quanto riguarda la situazione della Grecia, si potrebbero indicizzare gli obblighi di pagamento sulla base del tasso di crescita del PIL adattando automaticamente il peso del debito greco alla sua capacità di pagamento.

Questo tipo di obbligazioni hanno funzionato in qualunque altro posto, come ad esempio nella recente ristrutturazione del debito in Argentina. Ci sono state ovviamente delle controversie da parte degli investitori che hanno accusato il governo argentino di manipolare le statistiche. Ma l’Europa ha una soluzione ovvia a questo problema, ovvero Eurostat, l’agenzia statistica dell’Unione Europea.

Pertanto, invece di preoccuparsi dell’avvicinarsi di conseguenze simili a quelle della bancarotta della Lehman Brothers, i policymaker europei farebbero meglio a definire un accordo adatto per il debito greco, come il piano Brady, per evitare un simile scenario.

Il punto di svolta in questo contesto è che il presidente del Club di Parigi dei creditori sovrani al tempo del piano Brady era nient’altri che Jean-Claude Trichet, l’attuale presidente della BCE. Con Trichet il Club di Parigi approvò una riduzione del 50% del debito della Polonia a condizione che i creditori della banca del paese applicassero la stessa riduzione.

Quale migliore lascito per un presidente uscente della BCE se non quello di rispolverare i suoi appunti e spiegare agli altri policymaker europei come si potrebbe implementare la lezione appresa dal piano Brady nel contesto attuale?

Barry Eichengreen è professore di economia e scienze politiche all'Università di Berkeley in California. Il suo libro più recente è Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System (Privilegio esorbitante: l’aumento e la caduta del dollaro ed il futuro del sistema monetario internazionale – n.d.t.).

Guida alla lettura

Rapporto 2009 della Banca dei regolamenti internazionali
(estratto)

Meeting of Finance Ministers and Central bank Governors, Washington DC, 14-15 April 2011 : final communiqué,
dal sito internet http://www.g20-g8.com/

B. Eichengreen, Una inevitabile sforbiciata per l’Europa, in: Il Sole 24ore, 10 dicembre 2010

J. Pelkmans, The Case for more Single Market, in: CEPS Policy Brief, febbraio 2011